CAUSES OF WORLD DEPRESSION.

Manawatu Standard, Volume LII, Issue 241, 10 September 1932, Page 12

CAUSES OF WORLD DEPRESSION.

A GENEVA VIEW.

(By Nicholas Wood.)

The League of Nations has just published a valuable study of world economic and financial relations, which is very timely in view of the approaching World Economic Conference. The publication deals with balances of payments in all countries during 1930, and also analyses capital movements in 1931. The volume is admittedly one only to be read by the serious studept of monetary problems, but it and its companions “A Review of World Trade in 1930” and “International Trade Statistics 1930” form a compendium of all that anyone should wish to know of the broad develojunent of world commerce and finance in recent years.

These publications are the work of the members of the League’s economic and financial section, a body of experts who have previously given much interesting and useful information to the banking and trading community. In their latest publication they have some interesting comments to make upon the world financial and economic debacle; its origins and probable causes. Over against the general fall of prices, which is the usual explanation of the present depression, the League experts emphasise the subtler phenomenon of the dislocation of the prices of raw materials and those of manufactured goods. There is a significant connection between this disparity and the movement of investments. The chief borrowing countries are the raw produce countries which attract money when raw produce prices are high. Conversely, when industrial goods are dearer the investing countries, being mainly industrial, keep their money at home. But, whereas industry can quickly respond to falling market by checking output, agricultural output cannot be so promptly curtailed. Agricultural countries in adverse times try to make up in quantity for the loss in value and then, when foreign capital is again available, use it to carry growing stocks. The desperate efforts of the agricultural communities, when foreign lending abruptly stopped in 1930, to export their produce quickly and abundantly in order to try and pay for industrial imports gave the world’s exchange 'and distributive machine a heavy jolt. ■ That, according to _ the League authorities, must be considered as one of the fundamental causes of the present world depression.